Page 58 - Banking Finance October 2024

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target of 2.5% of the insured deposits that DICGC has that premiums must be based on the risk profile of the
set. It is especially outrageous in the case of commercial insured entity, and larger banks do not have to subsidize
banks. the claims of cooperative banks.

DICGC and RBI must reevaluate premiums paid by In case of bank failure, RBI has demonstrated alacrity
commercial banks, which hold a majority of the insured in working out a safety net, as seen in the case of Yes
deposits but have significantly lower risk profiles than Bank. The probability of public sector banks requiring
cooperative banks. If the insurance premium of 12p per bailouts is almost nil as the government owns them. The
Rs. 100 insured is reduced to 3p for commercial banks, likelihood of private sector banks requiring bailouts is also
this will provide them a relief of about Rs. 20,000 crore relatively low, as evidenced by data. Still, if one is in
in 2025-26. The premium for cooperative banks can be trouble, RBI has enough tools to ensure it is safely reset.
lifted up to 15p, the maximum the law allows. High insurance premiums are not required.
This will reduce DICGC's gross 2025-26 revenue by Excessive regulation and compliance costs in banking
about Rs. 20,000 crore and revenue surplus after tax by must be reduced to improve efficiency. RBI and the
about Rs. 15,000 crore. However, with balance premium government have done exceptionally well in developing
revenue along with investment income, DICGC will get tools to manage bank failures. They must ensure that
an estimated Rs. 24,000 crore in pre-tax revenue, which commercial banks do not bear the high compliance costs,
is still a significant surplus. Reducing the premiums for which are ultimately passed on to depositors and good
low-risk banks will send a clear message to the economy borrowers and drag down the economy. (Source: Mint)

Mobile tariffs have come down by 95% in the last 10 years:

Telecom Minister Schindia

In the last 10 years, mobile tariffi rates have come down by 95 per cent in terms of voice calls and 97 per cent in
terms of data, Minister of Telecommunications Jyotiraditya Scindia said. “The tariffi in India has come down from 51
paise to 3 paise, which is a 95 per cent drop. One GB of internet bandwidth has gone down from Rs. 297 per GB to
Rs. 8.7 per GB over 10 years, which is a 97 per cent drop.”

“On the other hand, moving from 3G to 4G and 4G to 5G, telcos have undertaken a capex of ?4.26 lakh crore just
only over the last two fiscals. If you put in more investments, there has to be a return,” Scindia said when asked
about tariffi increase impact on affiordability of mobile services. In July, the three private telecom operators — Bharti
Airtel, Reliance Jio (Jio) and Vodafone Idea (Vi) — had increased entry-level tariffis by 11-25 per cent. Airtel and Vi
have increased their entry-level tariffis more than 100 per cent in the last three years from about Rs. 99 to Rs. 199,
for around a month-long use of mobile service.
Post tariffi increase in July, BSNL has seen a surge of over 29.47 lakh subscribers while the three private telecom
operators together lost 38.65 lakh mobile customers. “Our telecom sector is a robust sector, a sector where we
have four players. There are very few countries in the world that have four players within the telecom sector in their
country alone; India is one of them and I look at a very strong telecom sector also, moving forward... I would cer-
tainly hope that BSNL also has a very strong role to play in that,” Scindia said while speaking on the achievements in
the first 100 days of the third term of the NDA government led by
Prime Minister Narendra Modi. He also said around 36,000 mobile towers for BSNL 4G services had been installed,
adding that BSNL will complete the installation of one lakh towers for 4G service by mid-2025. When asked about
the financial health of the telecom sector after the Supreme Court rejected Vi’s petition on adjusted gross revenue
(AGR), Scindia said the sector is extremely robust with four players. “The judgment of the Hon’ble Supreme Court
has just come out. It has been a couple of days. At this point in time, whatever the Supreme Court has ordained,
according to that the process has to be executed. We are still going through the process of examining that and see
what the repercussion of that is going to be,” Scindia added.

52 | 2024 | OCTOBER | BANKING FINANCE